India Behind The Lens (News Centre)

Every now and then I read about the desperate need to invest $ 1 trillion in infrastructure projects in India. Prime Minister Manmohan Singh has reiterated this time and again. Addressing the Asian Development Bank at Manila in May, former Finance Minister (and now the President of India) Pranab Mukherjee said: "India needs about USD 1 trillion in the next five years for infrastructure development, out of which at least 50 per cent has to come from the private sector. Therefore, there is a huge scope for investments in India." He of course also said that the focus remains on inclusive growth.
 
In June 2012, Manmohan Singh outlined his plan (see India's $ 1 Trillion Plan) while speaking at a meeting of the Ministers and Secretaries concerned with the departments of power, railway, road, shipping, civil aviation, and coal besides of course the Planning Commission. He said:

“India is at a critical juncture in its quest for prosperity and eradication of poverty...
We are running into more turbulent weather... There is a need to revive business and
investor sentiments...and a need to create an atmosphere conducive to investment ...
In the short term, development of infrastructure will boost investment rates across the
economy. In the long run, it will remove the supply constraints that affect
economic activity in agriculture, industry and trade.”  
If you would have noticed, he began by saying that India is at a critical juncture in its quest for prosperity and eradication of poverty (emphasis mine). In other words, it means the basic purpose of seeking $ 1 trillion investment is to pull the country out of dismal poverty and hunger. Following the trickle down theory, what the Prime Minister is suggesting is that the more investment we make in creating infrastructure the more it will help in removing poverty and hunger. I had posed this question some years back to late Dr Mehbub-ul-Haq, a former Finance Minister of Pakistan, who was also the founder editor of the UN Human Development Report. He replied: "We were wrongly taught that we should take care of GDP and it will automatically take care of poverty. Let us reverse it. We need to take care of poverty and it will automatically take care of GDP." (You can read my Aug 2000 article Poverty: Look beyond GDP growth).

Since 75-80 per cent of the world's poor do not have any social protection, the UN Special Rapporteur on Right to Food Dr Olivier de Schutter has called for a Global Fund for Social Protection (GFSP). Accordingly, 2-6 per cent of global GDP, or $ 1.26 trillion to 3.79 trillion (based on 2010 GDP figures) needs to be ensured for providing comprehensive rights-based social protection schemes that reduce vulnerabilities of local populations and provides them security (See the executive summary).

Olivier de Schutter is demanding a minimum of $1.26 trillion to ensure social livelihood protection for the world's poor. For a country like India, which has one-third of the world's hungry and an equal percentage of poverty stricken, plus where 47 per cent children below the age of five continue to be malnourished, its share would be much less. But given the magnitude of the crisis, and knowing that poverty eradication is not as simple and straight forward as is generally made out to be, I still feel that what Mehbub-ul-Haq had said is the ultimate way out. The $ 1 Trillion investment on infrastructure development is not going to make any appreciable dent on poverty removal. It has to be the other way around. Make investments on the human capital -- removing poverty, hunger and disease -- and we will see a stupendous rise in economic growth.

If I were in place of Dr Manmohan Singh, my $ 1 Trillion Plan would be radically different from his. I would aim primarily at removing hunger and poverty. I would begin by first ensuring food security at the household level, ensuring local production, local procurement and local distribution. Food security has to be an integrated part of the cropping system whereby sustainable agriculture would get a massive thrust. Turning farming into an economically viable proposition would sow the seeds of not only reverse migration but also ushering in rural prosperity. I an never forget a Punjabi saying: "Jeede ghar daane, ude bachhe bhi sayanne." Translated it means that he who has ample food in his house, his children would be healthy, wealthy and wise.

Poverty eradication therefore has to be directly linked with household food security.

My objective here is not to list out the steps that would be required to be undertaken for turning India into a place where happiness resides. All I am trying to say is that $ 1 trillion is what is required to wipe out poverty, hunger and diseases from the country. At present India is a $ 1.3 economy, where only a fraction of the population is gaining from the massive investments being made in Bharat Nirman and urban centre growth. The inequalities are widening with the rich becoming strikingly rich and the poor being further marginalised. This has to be reversed.

Pulling out 320 million people from hunger and an estimated 470 million from below the poverty line is the kind of investments that I would utilise $ 1 trillion for. Of course, several scheme will be woven around the creation of requisite infrastructure (not palatial housing for the stinking rich) providing employment both in the rural and urban areas. Education, health and housing will remain the priority sectors. Such policies will have to be redesigned. These have to be centered around sustainable development, policies which do not lead to exploitation of natural resources, do not contaminate the environment, destroy the soil fertility, pollute water and adds to global warming.

Real economic growth only happens when no one goes to bed hungry in a nation. This has to be on a sustainable basis. When every policy percolates to minimising hunger and poverty, why not make a direct assault to make hunger and poverty history. My $ 1 Trillion Plan would aim at not only making hunger and poverty history, but also wiping out disease and squalor.